August 14, the 117-year old London silver fix will be no more. The fix, which now is set by HSBC, Scotia-bank and Deutsche Bank, has been deemed no longer viable because Deutsche is dropping out and cannot find a buyer for its seat on the fixing body.
Critics of the fixing process have for decades alleged manipulation of silver — and gold — prices. Even supporters of the fix acknowledge that only two banks cannot provide a fix that would be accepted by the market.
Presently, a proposal by Thompson Reuters, the data and news service provider, and CME Group, which owns the COMEX and is operator of the Globex, an Internet platform futures trading exchange, looks to replace the bank-dominated silver fixing process.
Alternative proposals had been submitted by other well-known entities, such as Bloomberg LP, Platts and the London Metal Exchange in combination with Autilla, a technology provider. However, according to a Wall Street Journal source close to the situation, the Thompson Reuters/CMI proposal is a done deal.
The effort to find an alternative to the current benchmark comes as European market regulators have investigated interest rate and FOREX manipulations, which has emboldened critics of the silver fixing process.
Critics of the gold fixing process assert that a change is needed there also. The twice daily gold fix is set by gold traders from four banks: HSBC, Barclays, Scotia-bank and Société Générale.